Cash and Equivalents
Cash and equivalents include money in your bank account and “cash-like” investment options such as treasury bills and money market funds. Your money is generally very safe in these options, and you have easy access to it, but the rates of return tend to be low. The Tradex Investment Savings Account is a good example of this type of investment. It’s a place to park your money for shorter terms, perhaps while you are investigating other options or saving for a short term objective.
Fixed Income Securities
Fixed income securities are based on debt. When you buy a bond or another fixed income security, you are lending your money to a government or company for a certain period of time. In return, you receive the face value of the investment and interest at the end of the bond’s term. These options are generally low risk and provide a better rate of return than cash equivalents because you are taking some risk by lending out your money for a longer period of time. Fixed Income options through Tradex include Guaranteed Investment Certificates (GICs) and the Tradex Bond Fund.
Equities
Stocks or “equities” are basically a stake in a business. When you purchase equity, you become part owner of the business you are investing in. Compared to fixed income securities, stocks can provide relatively high returns, but you are at risk of losing some or all of your investment. The long term returns realized from the various asset classes can vary significantly and are related to the risk. You can purchase stocks through our partner’s online brokerage service Qtrade Investor.